Wisconsin Car Loan Laws

What a Wisconsin car contract can charge

A dealer-arranged loan is a retail installment contract. Wisconsin's motor vehicle installment sales statute, s. 218.0142, says a retail installment sale made after October 31, 1984 is not subject to any maximum finance charge. The general Consumer Act rule in s. 422.201 says the same for consumer credit transactions.

The statute protects you in other ways. The sale must be in a signed writing, you must get a written statement of the cash price, down payment, trade-in credit, amount financed, finance charge and payment schedule, and you must receive an exact copy of the contract when you sign. A contract signed in blank is not allowed. A finance company that buys your contract must notify you in writing within 30 days.

Service fees and taxes in Wisconsin

• Service fee. Wisconsin's doc fee is called a service fee. The Department of Transportation has said the law sets no dollar cap, but it may judge whether a fee is reasonable and can order refunds of an improper fee. The fee may cover sales-related inspections or forms required by law, must be disclosed on the purchase contract, and the dealer must list what it covers if you ask.
• Advertising. An ad that leaves out the service fee must say the price does not include it.
• Sales tax. The state rate is 5%. A 0.5% county tax applies in counties that adopted it, based on where the car will be kept, and Milwaukee has its own city and county taxes.
• Trade-ins. The amount allowed for your trade-in is not taxed when the trade is part of the same sale.

Check the dealer's total, including the service fee and any add-ons, with the out-the-door price calculator.

Falling behind on a car loan in Wisconsin

On a monthly contract, you are in default under s. 425.103 when more than one full payment has been unpaid for more than 10 days, or when the first or last payment is 40 days late. Late fees do not count toward that amount.

1. 1 Notice of right to cure. Before acting on the default, the creditor must give you a notice under s. 425.104. For a car, it must be combined with a repossession notice that says you may demand, in writing within 15 days, that the creditor go to court.
2. 2 15 days to cure. During that time, the creditor may not accelerate, sue or take the car (s. 425.105). Pay the past-due installments and any unpaid late charges, and the contract continues as if you had not defaulted.
3. 3 Limit. You have no right to cure if you already defaulted twice on the same contract in the previous 12 months and got a cure notice each time.
4. 4 Repossession without court. If you do not cure or demand a hearing, the creditor may take the car no sooner than 15 days after the notice. It may not breach the peace or enter your home unless you ask it to (s. 425.206).

After repossession in Wisconsin

• 15 days to redeem. Within 15 days after the car is taken, you can get it back by paying the past-due amount without acceleration, the creditor's allowed costs, and a deposit equal to the lesser of three installments or a third of what remains (s. 425.208).
• No deficiency on small debts. If you owed $1,000 or less at default, you are not personally liable for the rest after a repossession or voluntary surrender (s. 425.209).
• Proper sale required. For larger debts, you owe a deficiency only if the creditor sold the car in good faith and in a commercially reasonable way.

Our guides to repossession and the balance left after a sale explain how to respond.

Where to check a lender and complain

Under chapter 218, sales finance companies, including dealers that keep their own installment contracts, need a license from the Division of Banking or the Department of Transportation. A finance company that buys contracts without a required license can lose the right to collect.

Questions people ask